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GIDC issue goes finally to SC

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The GIDC issue became debatable when the government promulgated an ordinance last week that offered Rs210 billion financial amnesty to big businesses, including fertilizer, general industry, IPPs, power generation companies, K-Electric and CNG sector, etc. Prime Minister had acknowledged that from January 2012 till December 2018, the total amount trapped in the GIDC litigation had risen to Rs417 billion. In April 15, 2015, the apex court had discarded federal government’s petition seeking to review its Aug 22, 2014 verdict and explain that collection of over Rs100 billion under GIDC Act was not accountable to be refunded to industrial consumers of gas from whom it was recovered. The then GIDC law had legalized recovery of GIDC from non-domestic consumers mainly industries. Later on the lapse of the GIDC ordinance the National Assembly and Senate passed the GIDC Act, 2015 and abolished the GIDC Act, 2011.
Prime Minister Imran Khan lastly decided to withdraw a disputable ordinance promulgated last week that offered Rs210 billion financial amnesty to big corporate. The government will also request the Supreme Court of Pakistan to joint all stay orders issued by various high courts and itself take a quick decision in ongoing cases on the Gas Infrastructure Development Cess. A day earlier, the federal cabinet had asked the ministry of law to amend the GIDC Ordinance of Aug 27, 2019 to include the condition of legal audit before signing settlement agreement with these sectors namely fertilizer, general industry, IPPs, generation companies, K-Electric and CNG sector. Nevertheless the condemnation continued to grow in the general and social media, as well as from within the ruling party, forcing the government to change the whole leadership. Taking into the recent disagreement, the prime minister, in the interest of clearness and good government, has decided to remove the said ordinance. The prime minister also instructed the attorney general to move an application for immediate hearing in the Supreme Court, so that the matter is decided at the soonest, precisely in conformity with the law and the Constitution. This was later reaffirmed during a joint news conference of the government’s complete economic team including Prime Minister’s Advisers Dr Abdul Hafeez Shaikh and Abdul Razak Dawood, Federal Ministers Khusro Bakhtiar, Omar Ayub Khan and Hammad Azhar and special assistant to the prime minister on petroleum Nadeem Babar. Dr Shaikh stated the Prime Minister had ordered that the subject be reported to the Supreme Court which should now guide on how to go with the problem. He said the government’s aim was to take any decision which was in line with law, in the benefit of people instead of any vested interest and openness should be such that any fair minded person could welcome it. The prime minister believed that justice must not only be done but it must also be observed to be done’ and hence he decided to keep everything honest and fair. He said the attorney general would now request the Chief Justice of Pakistan to call GIDC linked cases in high courts, combined all of them together and hold an early hearing on the subject and decide the matter on worth once and for all. The prime minister stated that total amount trapped in the GIDC litigation from January 2012 till December 2018 was about Rs417billion. In the first round of judicial proceeding, the Supreme Court cancelled the collection between 2012 and 2014 on technical grounds because it was meted out through finance bill and the federal government’s review petition was also discharged by the Supreme Court. In this context fresh legislation was brought about through an act of parliament, but it was disputed before high courts and a set of appeals was also waiting before the Supreme Court. The government is of the opinion the act introduced in 2015 would hold the ground because it was duly passed by both houses of the parliament. The prime minister stated the country should also know that going to the court carries a danger because the decision could go either way. This means that the government could get the whole amount or could lose it all and probably give up any chance of future revenue collections under this head. The government could be loaded with the load of managing refunds of about Rs295billion of the principal amount. The whole problem now come back to the present position , with the GIDC law before the courts, various stay orders in place, while farmers and power consumers continue to pay the levy which in some cases is being deposited with the government and in other cases being held by the producers awaiting the court decision. Realism points out that it is better to break the deadlock that has developed around the issue of the GIDC rather than let the issue decay in the courts. Prime Minister Imran Khan has now instructed his attorney general to move an application for immediate hearing in the Supreme Court.
Gas Infrastructure Development Cess liabilities worth Rs416 billion at 50 percent discount has distressed many. The withdrawal of the ordinance will be further of the years-long legal conflict between government and defaulters over the legality of the levy for quite some time, as well as cancel the reduction it proposed in the cess rates for future collection. The cancellation of the ordinance is regrettable both government and industry have miss the opportunity to erase the slate clean and start anew. The decision would not influence the industry in Punjab as large number of the gas consumers had already paid big portion of the liabilities. This would however affect the industry based in Sindh and Karachi because they had stay orders against the levy and were not paying their GIDC dues. The highest impact of the withdrawal of the ordinance for the fertilizer industry is that fertilizers will have to revise their prices. They are keeping the urea prices at their current levels by engaging the recent increase in the gas tariffs because government had comforted them of the settlement of the not paid GIDC liabilities and the reduction in its rates for future. The GIDC ordinance had offered opportunity to settle the remarkable problem once for all. An Ordinance was issued with regard to rehabilitating 50 percent of the blocked revenue by way of an out of court settlement after consultation with the industry. The Prime Minister wishes to notify the nation that going to the court carries a danger because the decision could go one way or another. This may be that the government would lose it all and probably or give up any chance of future revenue collections under this head.